Growing Pains

As they used to say on the old Monty Python Flying Circus BBC TV show "And Now For Something Completely Different".....

This has to do with the progress that I have experienced in my business doing my vinyl, audio cassette and minidisc to CD transfers.

About two years ago I began doing this stuff and it was hard to find customers. I had cheap equipment which I thought then was good enough. Little by little people gave me a chance and liked what I did. These people could only afford to pay between $ 5.00 to $ 20.00 per CD/album job.
I was OK with that because I needed the practice anyway. As time went on, word of mouth began to spread and a lot more customers began seeking me out.

At first this seemed like a good thing to me. Later it began to dawn on me that it was humanly impossible for me to be able to continue to service this growing mass of customers. There was only one of me and they began growing out of control like a virus.

I made enough from these guys to reinvest it into the business by purchasing more expensive equipment. This new equipment allowed me to produce a very high level of sound quality on the CD transfers. With some practice, it made everything that I had done previously sound like garbage. This was because I had input from a new type of customer (known as an audiophile)on what type of equipment I should get to make things better.

The previous crowd of nonaudiophiles was blown away by the new sound quality (BUT) still was not willing to pay more for my product. Their logic was "why should I when I can go down to the street corner and pick up a bootleg CD for just $5.00?"

My own logic was " I just spent thousands of dollars on this equipment and come hell or high water I'm going to recoup my investment on it".

I began seeking out other people who could pay more and I found a few that were willing. These guys were willing to pay hundreds of dollars for five album transfers at a time. Of course, I began paying more attention to these guys.

When the older group would approach me again, I would either tell them that I couldn't do it right now or that I would do the job but they would have to wait longer to get it back.

They began questioning me trying to find out what was wrong. A few times some of them gave me a self rightious attitude saying that I had failed them when I didn't deliver on time as promised.

I eventually told them that I had new customers that were willing to pay a lot more for my service. At first they couldn't understand why someone would be willing to pay that much for a CD. Then it turned into an attack with comments like "Oh, so now you think that you're too good for us" and "remember it was us who helped you become what you are now; you owe us"

I would just love to tell these guys what they can go do with themselves but I find myself at a bit of a crossroad. I'm still not making enough money from this thing to quit my day job or be able to hire extra help. Also if I did have money to pay a salary, where would I go to get the help that I need in a more or less start up business? I'm having a problem fleshing this thing out into a money making machine. Any suggestions?

Hey Mantik! Just curious, what is the content of these recordings people want transfered? You mention audiophile grade, are they personal performances? And what do they mean about "getting a bootleg down the street" for $5?

These are not any special recordings. They are previously released albums (in vinyl)of all the recording artists or bands that are readily available now on CD in any music shop.

Once in a while, I get someone who has a record that a particular record label chose not to release on CD. Ex. Right now there is a woman paying me a few hundred dollars a month to transfer 300 LPs to CD. They are all classical music and none of them were ever released on CD by their respective record labels.This job will probably take me a year and a half to complete.

The older crowd that I spoke of was giving me vinyl that has all ready been released on CD long ago. This is where their argument ( "why should I pay you to do this transfer for more than $ 5.00 when I can pick up a CD for that price from the guy on the street corner?")came from.

I don't know if you have noticed but scattered around NYC there is a huge network of unlicenced street peddlers that sell bootleg CDs of various currently popular and old recording artists or bands. These guys mostly are African and Asian and sell these knock off CDs for $ 5.00 a pop.

When I said Audiophile grade, I meant that there is a very elite group of music listeners that are willing to blow up to $100,000.00 on just stereo equipment. I'm not even touching on what they would be willing to pay for home theater equipment. For example, there are turntables made that cost as much as $ 10,600.00 like this one http://www.musicalsurroundings.com/debut.html which uses a vacuum pump to seal the record tight against the platter to eliminate any form of vibration. When you play a vinyl record on one of these connected to all the other super expensive equipment that these guys buy for just the stereo, it will blow away any playback of even DVD or SACD audio. A normal CD sounds pathetic by comparison. Very few people have heard the names of the manufacturers of this level of audio equipment. These manufacturers would be throwing their money away advertising in the mass media to people who think that spending $ 300.00 for a recordplayer is asking too much. What would be the point? They only target people who wouldn't blink an eye at throwing away $ 100,000.00 on a stereo system. People who in addition to the money shelled out on the purchase would give the store an additional $ 5000.00 as a trinket to have some of their people come to their house ,at say 2 pm tommorrow, and set it all up in their livingroom. Anyway I ran into a few of these guys and in the beginning they were basically laughing at the audio quality of my product in comparison to the audio quality that they are used to from their expensive systems. Since I purchased the better equipment according to their suggestions , they aren't laughing at me anymore!

Let me start by saying I am not a lawyer. Perhaps someone more versed in these matters can clear up the issue with more expertise.

What these street peddlers do is called "Piracy". It is one of the things that is contributing to the demise of the recording industry right now! Lots of people by burned CDs of their favorite artists at very low prices, do not pay retail for the music, and eventually help put engineers & record company employees out of work. It's a very big issue.

It is illegal, whether it is widespread or not.

What you are doing by selling CDs of music that you do not own the rights to may also be considered piracy & might be illegal. As I understand it, you CAN make copies of vinyl for personal use: that's OK. But once you start charging money for it, it becomes uncool in the eyes of the RIAA & the law.

Even if the vinyl has not been issued on CD, by transferring entire LPs to CD & selling them, you are infringing on the copyright owner's rights, I believe. It seems to me that your entire business is built around selling music to which you have no rights.

I don't know the laws pertaining to this issue, but it would seem illegal to me if the cd's were being duplicated more than once, and sold. However, if the service being provided is to give the owner of a purchased copy some thing to listen to in his car or discman, then I don't see that as any different than making a backup cd for windows.
It sounds to me like this guy is just making providing a service for someone who has rightfully purchased a vinyl recording.

Off hand I can't remember whose website I saw this on but it was a more established competitor offering exactly the same services.

Anyway this guy had posted the laws pertaining to this kind of activity (audio restoration). I remember one of the laws saying that it was OK to make a single copy of a musical recording "IF" you were changing the media format. I my case - vinyl, audiocassette or minidisc to CD. However, once I make that first copy in the new media format, if I make more than one copy and sell each additional copy, then I am committing a crime. But I'm not violating any laws if I am selling a service of transforming audio from one media to another one time.

OH, by the way, some facts from Sound & Vision magazine June 2003 page 87...

Special Report / Where Have All the CDs Gone ?: The Recording Industry blames piracy and downloading for sagging sales - here's the whole story By James K. Willcox

- "I think the courts forced the industry to reimburse customers who could prove that they purchased CDs during that time" (mantik's words).

2. They slashed the number of new releases by almost 25% during the past three years

Josh Bernoff's story:

3. Growing competition from other forms of entertainment such as DVD players, video games and the consolidation of radio-station ownership are having a more deliterious effect on sales than downloads.
Clear Channel Communications now own 60% of the rock stations in the US = homogenized play lists = fewer artists get exposure
4. Payola - labels pay promoters to get stations to lock out the new competition. It has become too expensive for all but the major labels.

5. MTV actually plays fewer and fewer music videos so people now turn to the internet as the primary medium through which they can discover- and perhaps buy - new music.

6. Record labels are also consolidating - four of the five major labels are owned by large public corporations which have increased the pressure on music divisions to make "hit" records to meet quarterly earnings expectations = labels signing fewer artists, paring rosters and staffs , taking fewer marketing risks and releasing fewer CD titles.
The rejected artists will then go to the smaller labels ...
7. Small labels lack the money and marketing muscle to generate huge sales , lack top shelf distribution and international sales.

8. High profile lawsuits filed by artists like the Dixie Chicks and Incubus against their own labels make fans aware of record industry contracts and accounting policies that result in fewer artists ever making much money from the sale of their music. This might lead to fans feeling less guilty about "stealing" music.

9. Fighting piracy is a waste of time if the customer is not served in the legitimate marketplace.